What is a Prime Bank Scheme?

The common offer in this scheme is the purchase of debt obligations (for example, loans, bonds, or debentures) guaranteed by the world’s top banks, so-called prime banks, which are usually offshore. Common terms promoters use to describe these schemes are bank-secured trading programs, high-yield investment programs, standby letters of credit, prime-bank notes, bank-issued debentures, or bank guarantees.

How Does a Prime Bank Scheme Work?

Scam artists lead investors to believe they are participating in a secret trading regime with the world’s major banks. They often tell investors that this type of investment is usually reserved for rich, powerful individuals or corporations.

Investors may be required to sign non-disclosure agreements that prevent them from disclosing the identity of the parties involved and the terms of the transactions. The promoters will probably say these agreements are necessary to preserve the exclusive, secret nature of the scheme. However, it’s just a technique used in many investment schemes that buy the fraud artist time to move money offshore before the ruse is up.

The promised returns in these schemes are usually high annual returns from 20% to 200%, for example. The returns investors receive usually come from other investors’ money. Payments eventually stop because the promoters take the money offshore or squander it all on themselves.

Watch out for one or more of these common characteristics:

• Assurances the investment is guaranteed by a recognized international or central bank.
• Characterized as a secret, exclusive investment that requires you to sign an agreement not to talk about it.
• Vague, complex terminology used to describe how the investment works, and promoters may claim they are too complex for most people to understand.
• Promises of high returns that you will receive in payments over time.